Provident Financial Share Discussion Threads

[evilwebby] 18/8/2005 16:49

Awfully quiet on this thread. Looks a good buy now. Oversold and a great divi to boot. No position just yet, but it's pretty high on my watchlist.

[osull] 04/8/2005 11:51

danthomas,

I'm not sure it's bottomed, but the drop in share price does seem to be overdone. The "Yes Credit" news represented a drop in profits of about 8%, and was accompanied by a reduction in share price of 13%. The current PE is about 11.1, while the average for the sector is about 16.7. If the PE improves so as to recover half of this shortfall (ie a PE of 14), this implies a share price of over 770p (55.5p x 14). One thing which is not factored in here, however, is the effect of the Polish rate cap.

[danthomas25] 03/8/2005 13:38

anyone agree it seems to have bottomed at 640?
the bad news impact seems to have been much greater than it warranted... opinions anyone?
Cheers,
Dan

[ferrism] 18/7/2005 14:07

Have you been looking at Prudential's holding, nealf?

[clarence beeks] 17/7/2005 10:18

nealf - the thread header applied in March, not now.

[nealf] 17/7/2005 08:55

I have read the above criticism of the company.
Prudential insurance however do not seem to have the same opinion.

[one for the money] 12/7/2005 14:16

Out of a long early this morning. IMHO this is too volatile for me to guess at the moment, so i'll stay out - could go either way.

...but it should theoretically stabiise around 660

Cheers
john

[abcd1234] 12/7/2005 09:35

folks still short here??

whats the view re price

ta

[one for the money] 06/7/2005 15:53

Good day! - any ideas why?

Cheers
john

[sealed] 26/6/2005 10:46

Its summer. Time to put the shorts on again


Go on, Provident, sue me!
Jeff Prestridge, Mail on Sunday
26 June 2005

Controversial doorstep lender Provident Financial will get a dose of its own hard-nosed treatment this week. It will be challenged to defend sky-high interest charges for thousands of borrowers paying rates that can range from 170% to 500%.

The challenge is being led by Citizens Advice debt counsellor Gerald Benson, who is keen to test whether Provident's doorstep lending amounts to an extortionate credit transaction under the Consumer Credit Act.

With the agreement of former bus cleaner John McCandlish, 56, one of Provident's 1.5m borrowers, Benson is writing to Provident's senior team, led by chief executive Robin Ashton, daring them to defend their interest rates in court.

Benson, 76, no stranger to taking on big institutions, is convinced that a court would rule in his favour. That would pave the way for financial redress for thousands, if not hundreds of thousands, of Provident customers, many of whom are on low incomes.

McCandlish, who lives alone in the deprived Drumchapel suburb of Glasgow, has not worked for 17 years because of a nervous disorder and survives on benefits of £123 a week.

The Act gives courts the power to grant financial redress to victims of extortionate lending. Though a successful court challenge has never been made against Provident, other lenders have been on the losing end of judgments.

Last October, Liverpool County Court wiped out a £384,000 debt run up by Tony and Michelle Meadows of Southport, Merseyside, after they had borrowed only £5,740 in 1989 to carry out home improvements. The loan spiralled out of control because of annual interest of 34.9% and missed payments.

Judge Nigel Howarth branded the loan from London North Securities as an extortionate credit bargain under the Act, but the lender is challenging the ruling in the Appeal Court.

Though Ashton fiercely argues that his company's lending is 'clear, flexible, transparent and personal', Benson thinks otherwise. He believes that interest charges of up to 500% amount to extortionate credit 'in anyone's language'.

Provident specialises in lending small sums, typically between £200 and £300. Borrowers may choose to pay over 23, 31 or 55 weeks. Most customers - 80% - opt for the longest period. A customer borrowing £200 over 55 weeks pays £330, equivalent to an annual percentage rate of 177%. Over 31 weeks, repayments total £310, resulting in an APR of 365%. Over 23 weeks, repayments total £294.40, equivalent to an APR of 497%.


Benson's letter to Ashton states that McCandlish will not make any further payments on his outstanding loan because of the extortionate interest being charged - 300% plus. Benson believes Provident will be forced either to write off the loan or take McCandlish to court, forcing an investigation under the extortionate credit interest terms of the Consumer Credit Act.

Ashton told Financial Mail he was sure his company's lending would stand up to court examination. 'I am absolutely confident that our home credit is competitively priced in the small loans market,' he said. 'Any legal scrutiny would prove that.'

He also said that Benson was at odds with the findings of a Citizens Advice report five years ago that stated: 'The interest rate as expressed by the APR is not a particularly helpful guide to the overall cost of a credit facility on a small loan.

'In such cases, the relatively high administrative costs proportional to the amount borrowed results in a high APR, but one that still represents a non-extortionate agreement.'

Benson says each Citizens Advice Bureau is independent and has the freedom to campaign on specific issues. Recently, he persuaded Lloyds TSB to compensate clients who had been sold loan protection insurance they did not want or could not benefit from.

Doorstep lender of last resort for poor the banks won't touch

PROVIDENT Financial is the biggest supplier of home or 'doorstep' credit, controlling nearly half the market. It operates through 12,000 agents who visit borrowers every week to collect repayments. Eight out of 10 agents are women and some are former customers.

Most borrowers are on low incomes and usually turn to Provident because nobody else will lend to them. The Bradford-based company is already the focus of a Competition Commission inquiry triggered by a 'super complaint' lodged against the £2bn home credit market a year ago by the National Consumer Council.

The council accused doorstep lenders of exploiting poor families who, it said, had little choice because mainstream banks would not lend to them. The council's complaint led to an Office of Fair Trading report, which concluded that doorstep lenders had limited incentive to compete on price and routinely exploited borrowers. The OFT asked the Competition Commission to investigate.

The watchdog could force the break-up of Provident or insist on greater competition. But Provident is putting up a fight. It said 93% of customers were satisfied with its service. It also argued that home credit is one of the 'most transparent forms of credit available'.

[call-logger] 08/4/2005 04:53

Time to close this short now, I think


Responsible Lad - 7 Apr'05 - 23:49 - 4455 of 4455


The 4% charge is just for the month, so I pay them back £104. But if I had just one win from that money that would cover the interest 10 times over.

Its great learning about life and the finding out the hidden treasures.

[jedi trader] 23/3/2005 11:05

Personally i think Iqbal and his brother are shorting it along with the rest of the asian community in Woking.

[beorn in the usa] 23/3/2005 11:03

Looks like the market has finally woken up to the fact that this share has peaked.

[jedi trader] 23/3/2005 10:58

I know whats happened, Iqbal and his brother Abdul Rajit Barnes have refused to pay the bill for the taxi cars they purchased.

[beorn in the usa] 23/3/2005 10:56

thar she blows.

[beorn in the usa] 21/3/2005 09:16

Nice find Mike.


£6.20 is my target.

[beorn in the usa] 21/3/2005 08:00

LoL!


Nice one Sealed.

[sealed] 20/3/2005 11:28

Sunday Telegraph

Market miscellany
Edited by Grant Ringshaw (Filed: 20/03/2005)


Sell Provident Financial

On the surface, Provident Financial (704.5p), the UK's leading doorstep lender, produced a decent set of full-year results last week. Pre-tax profits beat City expectations, rising by 7 per cent to £220.7m.


But the detail of the figures presents a far more mixed picture. Provident Financial's core UK business is struggling - pre-tax profits are flat while customer numbers fell in 2004 by 4.7 per cent. Even though Provident lends to people at the riskier end of the market, more mainstream lenders have been invading this territory in a bid to gain the higher margins in the sub-prime sector.

Meanwhile, attempts to diversify in the UK have met with mixed success - the motor insurance business is doing well, with a 21 per cent jump in profits. But the acquisition of Yes Car Credit, which gives people on low incomes finance to buy cars, has been a disappointment - profits slumped by 60 per cent last year. As a result, the group's growth was driven by a 68 per cent rise in profits at the international business, so far focused on developing markets in eastern Europe.

While Provident deserves credit for the bold strategy, some analysts argue that international profits growth will slow as new countries are unlikely to provide the opportunities on offer in the key Polish market. Provident also faces a huge threat from a Competition Commission investigation into the home credit market, following allegations by consumer groups that borrowers are being overcharged. An unfavourable ruling could force Provident to change its business model.

Significantly, new accounting rules mean that Provident's nominal profits will be reduced in the future, putting pressure on dividends. Teather & Greenwood says this threatens one of the major reasons to hold the shares - a yield of almost 5 per cent. Investors should sell.

[beorn in the usa] 18/3/2005 09:51

You can't have a spread betting account Clive, surely?

I thought most spread bet companies had a £10 deposit minimum?